Romania: Modern Retail in Review - 2018
Modern retail in Romania is an about EUR12 billion market with more than 2,500 stores, dominated by ten international actors. The sector saw a number of executive changes, expansion by several hundred stores and growth in sales across the board.
Kaufland’s revenue overshot the 10 billion-lei (EUR2 billion) mark
German-held hypermarket chain Kaufland, the leader of the grocery retail in Romania, ended last year with RON10.1 billion revenue, 4% higher than in 2016, according to ZF data.
Kaufland thus cemented its grocery retail leading position in Romania and was the only actor in this sector that posted more than RON10 billion revenue. Only two groups in Romania have achieved a similar feat - automaker Automobile Dacia and OMV Petrom.
Three retailers – Carrefour, Mega Image and Selgros, got new bosses in 2018
Two expats and a Romanian executive took the reins of businesses generating RON18 billion revenue together. Carrefour, Mega Image and Selgros replaced their bosses.
Jean Richard de Latour took the reins of Carrefour, Robert Hellwagner was put in charge of Selgros and Mircea Moga of Mega Image. Carrefour replaced an expat with another, while Mega Image put a Romanian in charge for the first time. Selgros, on the other hand appointed a foreign executive to the top spot for the first time, who replaced the longest-standing manager in the industry, Romanian Alexandru Vlad. Vlad, a lawyer, was appointed at the helm of Selgros in 2001 when the network arrived in the country. He was promoted to run Selgros in Germany, the top market for the group.
Auchan enters new market segment with LillaPois drugstores and its own restaurants
The French retailer opened its first La Masa Auchan restaurant in Baia Mare this summer. The restaurant is located in the shopping gallery of the Auchan hypermarket there and serves traditional Romanian dishes, as well as burgers and pizza. The retailer will also open a restaurant in the space once occupied by McDonald’s in Obor, Bucharest.
Auchan, which has over 50 stores in various formats in Romania, in 2018 opened its first LillaPois drugstore in the country in the Auchan Crangasi shopping gallery. The drugstores carry almost 14,000 cosmetics, perfumery personal and home care products.
Metro is looking for buyer for its real estate in Romania
Germany’s Metro hired Goldman Sachs to find a buyer for its real estate business – plots of land, stores and other real estate in Romania and Bulgaria, market sources say.
The company, which has 30 cash & carry stores is looking to sell its real estate and then rent the spaces to continue operating. It has about 200,000 square meters in Romania, according got ZF estimates, in addition to the land. Its resale state portfolio is worth about EUR400 million to EUR600 million, considering a store (building and land) is valued at EUR15 million to EUR20 million.
Mega Image in talks to buy Zanfir store chain, seeks to enter Moldavia
Mega Image is in talks to buy Zanfir store chain in Vrancea, which would be one of the most important deals in retail, market sources say.
Zanfir has ten stores in Vrancea and Bacau Counties, while Mega Image has 650 supermarkets and convenience stores, which makes it the second largest modern grocery retailer in the country.
This deal would gain Mega Image entry in Vrancea and a new development area, Moldavia.
A former Mega Image CEO once said the chain needed to go out to the provinces if it wanted a shot at the top three now comprised of Kaufland, Carrefour and Lidl. The retailer has expanded beyond Bucharest in recent years going to Cluj and Timisoara.
XXL Mega Discount stores turn into shopping centers
Five of the XXL Mega Discount stores were remodeled, following a more than RON25 million investment. Two were bought by Lidl and the eighth store, located in the Unirea Shopping Center in Brasov, was turned into a Penny Market.
Germany’s Rewe group announced more than a year ago it would close the XXL Mega Discount stores due to their poor performance and would only keep the Penny Market chain. The eight XXL Mega Discount stores were about three times larger than Penny Market stores on average.
Cora owners looking into the sale of local operations again
French-Belgian Louis Delhaize group, the owner of the Cora hypermarkets in Romania is looking into the sale of the local operations again, ZF has found. It is negotiating the sale of either all its 11 stores as a `bundle’ or separately. Cora did not return ZF’s call for comment by press time.
Cora has previously negotiated with local retailers, including Kaufland but talks fell through and have been recently resumed.
Modern retail grows beyond 2,500 stores, 7 euro-billionaires
Modern retail, dominated by foreign companies, grew to more than 2,500 stores this year. The retailers opened about 300 stores, mostly small ones, in 2018. There are several store formats on the market – hypermarkets, supermarkets convenience, discount and cash & carry stores. Modern retail in Romania started in 1996 with the arrival of Metro Cash&Carry in partnership with businessman Ion Tiriac.
It has since grown to ten networks, 2,500 stores, EUR12 billion ales and almost 60% share of the grocery retail market.
It also grew to seven-euro billionaires last year. Out of the ten actors in the sector, seven posted more than EUR1 billion sales last year.
Profi and Mega Image are the latest members in the euro-billionaire club, while Metro Cash&Carry returned to it last year, according got ZF estimates. They joined Kaufland, Carrefour, Lidl and Auchan.
Average net retail wages above RON3,000
The top five modern retailers paid average net wages of RON2,100 to RON3,000 last year. Each of them is among the largest local employers. The networks employ about 50,000 people together. The average net wages the major retailers pay have gone up constantly but faster in the past two years, due to the labor shortage.
The net wage the largest modern retailers pay is about RON2,100 per month, except for Lidl, which pays RON3,100 on average, ZF has calculated from publicly available data.
Latest bet of international retailers: Romanian-flavored private labels
How do retailers react to the rising purchasing power and change in consumer behavior? Modern retailers are launching private labels on the premium segment and their own Romanian brands, to be able to adjust to the changes in consumer behavior. The private labels launched by international chains – K Vreau din Romania (Kaufland), Camara Noastra (Lidl) and Gusturi Romanesti (Mega Image) generate EUR200 million to EUR250 million sales to retailers. The latest such Romanian-flavored private label came from Penny Market, Hanul Boieresc.(EUR1=RON4.6528)
Source: December 2018, ZFEnglish
